Uss Co., Ltd. · TSE:4732
Uss — Q1 FY3/2022 Earnings Presentation
35 slides from Uss's earnings presentation, August 2021
Slide 1: Consolidated Results of Operations, First Quarter FY3/2022
Consolidated Results of Operations The First Quarter, Fiscal Year Ending March 31, 2022 USS Co., Ltd. August 2021 1
Slide 2: Results of Operations
Results of Operations First Quarter Fiscal Year Ending March 2022 2
Slide 3: Highlights of 1Q FY3/2022
Highlights of 1Q FY3/2022 ◼ Net sales ¥20.37 billion (up 26.9% YoY) Operating profit ¥10.64 billion (up 58.1% YoY) • Number of vehicles contracted increased as used car demand rose due to delays in new car deliveries and other reasons 1Q • Used car exports were up 79.4% year-on-year and only 0.1% be
Slide 4: 1Q FY3/2022 – Summary of Consolidated Results of Operations
1Q FY3/2022 – Summary of Consolidated Results of Operations ◼ Sales was up 26.9% YoY to ¥20.37 billion, operating profit was up 58.1% to ¥10.64 billion, and profit attributable to owners of parent up 59.1% to ¥7.34 billion. ◼ Big recoveries in sales and earnings at all levels from one year earlier,
Slide 5: 1Q FY3/2022 – Reasons for Change in Operating Profit (Actual)
1Q FY3/2022 – Reasons for Change in Operating Profit (Actual) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 1.34bn Increase in cost of materials purchased ▲0.28bn Decrease in goodwill amortization 0.30bn Increase in contract completion rate 1.32bn Increase in cost of goods sol
Slide 6: Net Sales and Operating Profit by Business Segment
Net Sales and Operating Profit by Business Segment (Million yen) Net sales 1Q FY3/2020 1Q FY3/2021 1Q FY3/2022 Year on year Auto auction 16,358 13,302 16,343 122.9% Used vehicle purchasing and selling 2,067 1,486 2,110 142.0% Other 1,434 1,267 1,917 151.3% Total 19,861 16,056 20,370 126.9% Operating
Slide 7: Consolidated Balance Sheets and Statements of Cash Flows
Consolidated Balance Sheets and Statements of Cash Flows ◼ The primary use of cash in investing activities was the purchase of property, plant and equipment. ◼ The primary use of cash in financing activities was dividends paid. ◼ Equity ratio: 83.5% Consolidated Balance Sheets (Summary) (Million yen
Slide 8: Automobile Market
Automobile Market New Car Registrations and YoY Changes Used Car Registrations and YoY Changes (Thousand vehicles) (Thousand vehicles) 3,000 40% 3,000 30% 23.8% 20% 14.6% 20% 1,967 1,908 1,948 6.2% 6.4% 10% 2.8% 1,673 1,609 1,704 1,672 1,720 1,627 1,705 1,694 -1.1% 1,528 1,557 1,396 1,371 1,429 1,50
Slide 9: Auto Auction Segment (1)
Auto Auction Segment (1) ◼ Vehicles consigned increased 13.0% YoY to 713 thousand; contract completions increased 31.3% YoY to 449 thousand (contract completion rate: 63.0% against 54.2% in the previous fiscal year) ◼ Sales and earnings increased because of the larger number of vehicles handled, the
Slide 10: Auto Auction Segment (2) Monthly Data
Auto Auction Segment (2) Monthly Data Vehicles consigned Vehicles contracted Contract completion rate (Thousand vehicles) 400 80% 71.0% 69.4% 69.6% 327 65.7% 66.7% 65.0% 293 64.5% 63.6% 63.7%64.6% 64.0%63.9% 60.8%61.5% 61.6%62.6% 61.9% 61.8%62.8% 61.4% 61.2% 60.5%59.5% 59.2% 58.7%58.7% 55.9% 288 60%
Slide 11: Auto Auction Segment (3)
Auto Auction Segment (3) No. of Vehicles Consigned and Contract Completion Rate Vehicles Contracted Vehicles consigned Vehicles contracted USS Industry's average (excl. USS) (Thousand vehicles) 1,000 80% 814 72.0% 752 771 756 738 713 664 699 689 706 685 68.9%69.7%69.6% 631 605 70% 67.0% 66.3%65.9%66
Slide 12: Auto Auction Segment (4) No. of Members and Off-site Ratio
Auto Auction Segment (4) Total Consignment Fees and Total Contract Completion Fees and Consignment Fee per Vehicle Contract Completion Fee per Vehicle Total consignment fees Fee per vehicle Total contract completion fees Fee per vehicle (Million yen) (Yen) (Million yen) (Yen) 5,000 5,394 5,509 5,505
Slide 13: Auto Auction Segment (5)
Auto Auction Segment (5) From April 1, 2021 to June 30, 2021 (Number of auctions held, Vehicles) Number of auctions Number of consigned vehicles Number of contract completions Contract completion rate 1Q FY3/22 1Q FY3/21 1Q FY3/22 1Q FY3/21 YoY change 1Q FY3/22 1Q FY3/21 YoY change 1Q FY3/22 1Q FY3/
Slide 14: Auto Auction Segment (6)
Auto Auction Segment (6) (Vehicles, %) Apr. May Jun. Jul. Aug. Sep. First Half Oct. Nov. Dec. Jan. Feb. Mar. Second Half Fiscal Year FY3/20 265,360 248,623 257,709 249,936 210,323 229,142 1,461,093 252,790 257,226 196,407 211,406 251,864 293,266 1,462,959 2,924,052 YoY ▲0.3 7.1 1.4 11.5 2.0 ▲2.1 3.1
Slide 15: Used Vehicle Purchasing and Selling Segment
Used Vehicle Purchasing and Selling Segment ◼ Sales and earnings increased at Rabbit, which purchases used vehicles, as the number of vehicles sold increased and used car auction prices were high. (Net sales increased 58.1% YoY to ¥1,219 million, Operating profit ¥32 million (operating loss of ¥37 m
Slide 16: Other Segment
Other Segment ◼ In the recycle business, sales and earnings increased because high prices of metal scrap raised sales and gross profit and there was a large number and volume of industrial plant demolition projects. (Net sales increased 60.5% YoY to ¥1,892 million, Operating profit ¥340 million (ope
Slide 17: Consolidated Forecast for FY3/2022
Consolidated Forecast for FY3/2022 17
Slide 18: FY3/2022 – Consolidated Forecast
FY3/2022 – Consolidated Forecast ◼ No revisions to the FY3/22 forecast announced on May 11, 2021 (Million yen) FY3/20 (Actual) FY3/21 (Actual) FY3/22 (Forecast) VS. previous year Net sales 78,143 74,874 77,600 103.6% Gross profit 47,188 46,533 47,620 102.3% (Per sales) (60.4%) (62.1%) (61.4%) Operat
Slide 19: FY3/2022 – Reasons for Change in Operating Profit (Forecast)
FY3/2022 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in vehicles consigned 2.60bn Increase in purchases ▲0.79bn Decrease in goodwill amortization 1.20bn Increase in recycling 0.94bn Increase in cost of goods sold ▲0.74bn Used vehicle sales/purch
Slide 20: FY3/2022 – Forecast by Business Segment
FY3/2022 – Forecast by Business Segment (Million yen) FY3/20 FY3/21 FY3/22 VS. previous (Actual) (Actual) (Forecast) year Net sales Auto auction 63,350 61,048 62,695 102.7% Used vehicle purchasing and selling 9,099 8,646 9,051 104.7% Other 5,692 5,180 5,853 113.0% Total 78,143 74,874 77,600 103.6% O
Slide 21: Market Overview, Strategy for Creating Value Over the Medium Term
Market Overview Strategy for Creating Value Over the Medium Term 21
Slide 22: Used Car Auction Market and USS Market Share
Used Car Auction Market and USS Market Share ◼ Maintained higher market shares and profit in the period of sluggish markets following the financial crisis of 2008-2009. ◼ The JAA acquisition significantly raised the USS Group’s market share 1990(CY) market share 2000(CY) market share 2020(CY) market
Slide 23: Basic Policy on Finance and Shareholder Distributions
Basic Policy on Finance and Shareholder Distributions Increase shareholder distributions while continuing investment for growth ◼Consolidated dividend payout ratio: Over 55% from FY3/2020 Consolidated dividend payout ratio 344.5% Policy Actual 300% 90% 70% 67.0% 51.5% 50.1% 50.1% 44.3% 45.1% 45.1% 4
Slide 24: Earnings Distributions – Dividend Policy
Earnings Distributions – Dividend Policy ◼Plan to pay 58.4 yen dividend per share for FY3/2022 (up 2.9 yen) ◼Forecasting 22 consecutive years of dividend growth since listing (Yen) DPS Consolidated payout ratio 344.5% 80 160% 300% 60 58.4 55.4 55.5 120% 50.4 46.4 47.8 40.8 40 37.7 34.7 80% 30.75 24.
Slide 25: Earnings Distributions – Total Payout Ratio
Earnings Distributions – Total Payout Ratio ◼Flexible stock repurchases while maintaining stable dividend. Dividend Paid Stock Repurchased Total Payout Ratio (Million yen) 344.5% 30,000 224.5% 300% 200% 160% 20,000 111.4% 120% 117.6% 103.5% 104.0% 84.2% 80% 10,000 76.8% 59.3% 53.8% 50.1% 45.1% 52.1%
Slide 26: Earnings Distributions – Return on Equity (ROE)
Earnings Distributions – Return on Equity (ROE) ◼No change in the medium-term ROE target of at least 15%. ROE 19.5% 20% 18.2% 16.5% 15.5% 15.9% 15.8% 15.3% 15.1% 14.7% 14.8% 14.9% 14.5% 14.2% 14.1% 14.5% 16.0% 13.7% 15.0% 10.9% 11.7% 11.3% 10% 10.4% 2.3% 0% FY3/00 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05
Slide 27: Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions
Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions ◼Aim at increasing shareholder value by a two-pronged strategy of solid investments in growth and active shareholder distributions Leveraged Internet Increase in number of and IT members – users Rise in contract
Slide 28: Auto Auction Segment – DX initiatives (1)
Auto Auction Segment – DX initiatives (1) ◼ Started using new systems for vehicle inspections in order to find defects that are not readily visible Underbody imaging system Inspections using on-board This system is used to inspect underneath diagnostic system scans vehicles, including tires and whee
Slide 29: Auto Auction Segment – DX initiatives (2)
Auto Auction Segment – DX initiatives (2) ◼ Started work on the digitalization of the auction sheet (entry form). Commenced test operations at the Nagoya and other sites with the aim of launching full-scale operations by the close of the fiscal year ending in March 2022. Digitization will lead to mo
Slide 30: Contact Information and Notes
Contact Information Notes General Affairs Department, • This document has been translated from the Supervisory Office, original Japanese as a guide for non-Japanese USS Co., Ltd. investors. • Forward-looking statements in this material are based on information available to management at TEL : +81-52
Slide 31: Reference
Reference 31
Slide 32: History of USS Long-term Growth
History of USS Long-term Growth Before 2000 1982: Held the first auction with only 255 vehicles consigned 1988: Expanded the Nagoya Auction Site. The number of POS seats was 570 (the largest in Japan). Early nineties: Opened Kyushu and Tokyo Auction Sites 2017: Late nineties: Opened Okayama, Shizuok
Slide 33: Business Models for USS
Business Models for USS Used Ferrous vehicles Rabbit scrap End (Used vehicle ARBIZ Steel users purchases) makers Payment for Payments vehicles Payment Payments for vehicles Used Used vehicles vehicles Members Members submitting consigning vehicles Auto Auction successful bids (buyer) (seller） • • Us
Slide 34: Automobile Market and USS Revenue
Automobile Market and USS Revenue ◼ The number of vehicles consigned is correlated through trade-ins to (1) New car registrations and (2) Used car registrations ◼ Total demand comprises domestic demand (2) and overseas demand (3). In recent years, total demand has been driven mainly by overseas dema
Slide 35: New/Used Car Registrations and Auto Auction Market
New/Used Car Registrations and Auto Auction Market ◼ The auction market continued to expand till 2000 as the share of used vehicles sold through the auction market increased as a share of the total used vehicle market. Starting in the mid-2000s, older vehicles and vehicles with high mileage which wo